Yansab’s Q2 misses estimate on shutdowns, says Al Rajhi Cap

Yanbu National Petrochemical Co.'s (Yansab) second quarter net profit (SAR346 million) missed Al Rajhi Capital’s estimates of SAR 516 million, the brokerage firm said in an earnings review.

“Yansab reported a 54 percent y-o-y (year-on-year) decline in net profit mainly owing to its pre-announced shutdown, the impact of which was previously estimated by the company at SAR 110 million, while the actual impact in our view was much higher,” Al Rajhi Capital added.

Revenue also fell short of the brokerage firm’s forecast of SAR 1.56 billion by SAR 200 million.

Yansab’s full-year net profit and revenue are estimated at SAR 2.03 billion and SAR 6.71 billion, respectively.

The brokerage, meanwhile, expects polymer prices to improve in Q3 unless oil prices see steep declines. Another positive for Yansab is that with expected increase in global gas supply and weak oil prices, NGL prices are likely to trade around the same levels, eliminating any risks of sharp upward movement in feedstock prices.

Overall, the stock has fewer downsides and is poised for recovery, Al Rajhi Capital said.

Meanwhile, despite the shutdowns, the petrochemical producer has the ability to pay higher dividend of SAR 4 per share over the next 12-month, it added.

The brokerage firm added that it remained “neutral” on the stock, keeping its target price unchanged at SAR 58.

With the expected dividend and current target price, Yansab is one of Al Rajhi Capital’s top picks in the Saudi petrochemical sector, the report added.